North Carolina House tells Senate no thanks for changes to its state budget

RALEIGH, N.C. (WGHP) – To the surprise of no one – literally – the North Carolina House voted unanimously Wednesday morning not to concur with the version of its budget bill that was returned from the Senate.

House Bill 259 was adjusted significantly by the Senate, and the vote was 108-0 not to accept those changes, which is what Rep. Donny Lambeth (R-Forsyth), its primary sponsor, had wanted.

“We had a pretty good budget we sent over to the Senate,” Lambeth said in moving not to concur. “It looks a little different coming back. I ask you to vote green – not to concur.”

This means that there will be a conference committee of members from the two chambers who will hash out the differences and produce a compromise version for further review, including by Gov. Roy Cooper’s veto process.

Senate Leader Phil Berger (R-Rockingham) had expected this – it happens every time in the biennial budget – and he said two weeks ago when the Senate introduced its version of the budget that he thought this could be completed by the end of June.

Moore told House members Wednesday that he hoped the House would adjourn by the end of June, but he said that would depend on how long it took legislators to iron out the budget. He didn’t mention the expectation that lawmakers also would take up drawing new electoral districts, a process sometimes can take a few weeks.

The House took its vote Wednesday to reject the budget without debate about what the Senate had done to its original bill because of a motion to call the question by Rep. Destin Hall (R-Caldwell) that passed, 68-40, along party lines.

During comments by members after all bills had been reviewed,  Rep. Marcia Morey (D-Durham) rose to complain about not being able to debate the bill. Rep. John Bell IV (R-Wayne) interrupted her, saying she was out of order.

“I think he’s right about that,” Moore told her. “I understand the lady has problems with the Senate’s budget, and based on the vote, I think 107 of your fellow members do as well. I think  we will have a chance to address that budget.”

The budgets passed by the House and the Senate do vary greatly. The variations of raises for teachers and state employees have gotten a lot of the headlines. Cooper has declared a “state of emergency” based on how public education was treated in the budget.

Both bills do include spending the one-time “signing bonus” for expanding Medicaid – as was accomplished under a separate law passed in March – but the Senate has added issues involving the certificate of need that medical facilities must meet before opening. The House had set that aside in its budget.

The House budget highlights

The House’s version of the budget called for spending about $29.787 billion in 2023-24 and $30.903 billion in ’24-’25. It includes a reduction in tax revenue in both years, with the state individual tax rate decreasing to 4.5% in 2024, which is earlier than lawmakers had thought could happen.

Some of the key points:

• Teachers would receive 10.2% raises (5.5% in the first year), but they also would receive 8 weeks of parental leave (up from 4), stipends for having a master’s degree and some assurances about class size for fourth and fifth grades.
• State employees would receive 7.5% raises (4.5% in the first year), and there would be an additional 2% for positions that are harder to fill, such as school bus drivers. North Carolina Highway Patrol employees would get 11% over 2 years.
• There are 2% cost-of-living increases for retirees (1% each year), a subject that committee members reinforced at length.
• UNC system employees would get 7.5% raises over two years.
• There is $40 million in the school safety allocation that Lambeth mentioned.
• There’s $1 billion in infrastructure to help with repairs to the water and sewage systems.
• The budget also allows for the State Bureau of Investigation to become an independent department, not under the Department of Public Safety, and gives legislators the right to remove its director for cause. The governor appoints the director to a 6-year term and currently is the only person who can remove that director.

The Senate budget highlights

The Senate’s version set spending at $29.8 billion in fiscal year 2023-24 and $30.9 billion the next year.  The individual income tax rate is planned to decrease to 4.5% by 2024 and 2.49% by 2030. There were plenty of spending initiatives that continued to live even though the House has suggested different levels for them.

Some of the key points:

• Increases by more than $1 billion in the state’s savings funds for rainy days, inflation and catastrophic events.
• Increases teachers’ salaries by 4.5% for the two years and state employees by 5%. Raises pay for starting teacher pay by nearly 11% over two years and would improve average teacher pay to $59,121 by the end of 2024-25.
• Spends more than $17.2 billion on education in 2023-24 and over $17.6 billion in ‘24-25.
• Expands school vouchers to all families, starting in 2024-25, a point the House had moved along at the same time on Wednesday.
• Adds $10 million in recurring contributions to help public K-12 schools hire around 120 more nurses, counselors, social workers and psychologists.
• Provides almost $70 million to expand community college courses in high-demand career fields, including nursing and other health-related programs.
• Provides $10 million each year and a one-time allotment of $5 million next year to help North Carolina A&T become the first historically Black college and university to obtain the R1 Carnegie Classification.
• Increases funding for large transportation projects by $473.85 million next year and $611 million the following.
• Distributes the $1.5 billion Medicaid signing bonus in $370 million for NC Care Initiative between ECU and UNC Health systems that will feature the construction of three regional health clinics, $96 million for rural loan repayment incentive programs for primary care and behavioral health providers, $60 million for start-up costs and expansion of healthcare programs at community colleges and $20 million for UNC-Pembroke’s new healthcare-oriented programs.
• Repeals certificate-of-need requirements for mobile MRI machines, linear accelerators, physician office-based vascular access for hemodialysis and kidney disease treatment centers and for ambulatory surgical centers and facilities with MRI machines in counties with a population of less than 125,000 that do not have a hospital.
• Adds $110 million to increase behavioral health provider rates on a recurring basis, $60 million for worker wage increases, $50 million to retain half of the COVID-19 enhancement for skilled nursing facilities, $15 million each year for free and charitable clinics and increases Medicaid reimbursements for private duty nursing services from $45 per hour to $52 per hour.
• Allocates $1.4 billion to NCInnovation to improve applied research outputs at UNC System schools and to help commercialize the results of that research.
• Provides $10 million in reserves to help local governments develop new mega sites and prepare them for business.
• $35 million for the school safety grant program.
• Provides almost $19 million for a new agriculture manufacturing and processing Initiative.